1. Chapter 12 – Reporting and Analyzing Cash Flows Click on links Exercise 12-4 page 547Cash flow from operations - IndirectExercise 12-4 Algo Exercise 12-5 page 547Cash flow from operations - DirectExercise 12-5 Algo Exercise 12-6 page 547Cash flow from operations - IndirectExercise 12-6 Algo Exercise 12-7 page 548Cash flow from operations - DirectExercise 12-7 Algo Exercise 12-8 page 548Investing ActivitiesExercise 12-8 Algo Exercise 12-9 page 548Financing ActivitiesExercise 12-9 Algo Exercise 12-10 page 548SCF – Indirect MethodExercise 12-10 Algo Exercise 12-11 page 549SCF – Direct MethodExercise 12-11 Algo Exercise 12-12 page 549Cash flow from operations - IndirectExercise 12-12 Algo Exercise 12-13 page 549Cash flow from operations - IndirectExercise 12-13 Algo Exercise 12-14 page 549Cash Flows SpreadsheetExercise 12-14 Algo Exercise 12-15 page 550Direct SCF – Supporting NoteExercise 12-15 Algo Exercise 12-16 page 551Indirect SCF – From Cash T-accountExercise 12-16 Algo Exercise 12-17 page 551Cash Flows on Total AssetsExercise 12-17 Algo Exercise 12-18 page 551Statement of Cash Flows -IFRSExercise 12-18 Algo McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Exercise 12-4 page 547 12-2

3. Exercise 12-4 page 547 Required: Prepare only the operating activities section of the statement of cash flows for 2013 using the indirect method. Cash flows from operating activities Net income$400,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$80,000 Gain on sale of machinery(20,000) Increase In Accounts Receivable(40,000) Decrease In Prepaid Expenses12,000 Increase In Accounts Payable6,000 Decrease In Wages Payable(2,000) 36,000 Net cash provided by operating activities$436,000 Salud Company reports net income of $400,000 for the year ended December 31, 2013. It also reports $80,000 of depreciation expense, and a $20,000 gain on sale of machinery. Its comparative balance sheets reveal a $40,000 increase in Accounts receivable, $6,000 increase in Accounts payable, $12,000 decrease in Prepaid expenses, and $2,000 decrease in Wages payable. Salud Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 12-3

4. Prepare only the operating activities section of the statement of cash flows for 2013 using the indirect method. Salud Company reports net income of $340,000 for the year ended December 31, 2013. It also reports $61,200 of depreciation expense, and a $3,500 gain on sale of machinery. Its comparative balance sheets reveal a $27,200 increase in Accounts receivable, $13,940 increase in Accounts payable, $7,480 decrease in Prepaid expenses, and $10,540 decrease in Wages payable. Cash flows from operating activities Net income$340,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$61,200 Gain on sale of machinery(3,500) Increase in Accounts Receivable(27,200) Decrease in Prepaid Expenses7,480 Increase in Accounts Payable13,940 Decrease in Wages Payable(10,540) 41,380 Net cash provided by operating activities$381,380 Salud Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 Exercise 12-4 page 547 Algorithm 12-4

5. Exercise 12-5 page 547 12-5

6. Exercise 12-5 page 547 Case X: Compute cash received from customers: Sales$515,000 Accounts receivable, December 31, 201327,200 Accounts receivable, December 31, 201433,600 Case Y: Compute cash paid for rent: Rent expense$139,800 Rent payable, December 31, 20137,800 Rent payable, December 31, 20146,200 Case Z: Compute cash paid for merchandise: Cost of goods sold$525,000 Merchandise inventory, December 31, 2013158,600 Accounts payable, December 31, 201366,700 Merchandise inventory, December 31, 2014130,400 Accounts payable, December 31, 201482,000 For each of the above three separate cases, use the information provided about the calendar-year 2014 operations of Sahim Company to compute the required cash flow information. 12-6

7. Exercise 12-5 page 547 Case X: Compute cash received from customers:$508,600 Sales$515,000 Accounts receivable, December 31, 201327,200 Accounts receivable, December 31, 201433,600 Case Y: Compute cash paid for rent:$141,400 Rent expense$139,800 Rent payable, December 31, 20137,800 Rent payable, December 31, 20146,200 DateDebitCredit 508,600 6,400 515,000 Accounts receivable General Journal Cash Sales DateDebitCredit 139,800 1,600 141,400 General Journal Rent expense Rent payable Cash 12-7

8. Exercise 12-5 page 547 Case Z: Compute cash paid for merchandise:$481,500 Cost of goods sold$525,000 Merchandise inventory, December 31, 2013158,600 Accounts payable, December 31, 201366,700 Merchandise inventory, December 31, 2014130,400 Accounts payable, December 31, 201482,000 DateDebitCredit 525,000 28,200 15,300 481,500 Cost of goods sold Merchandise inventory Cash Accounts payable General Journal 12-8

9. Exercise 12-5 page 547 Case Z: Compute cash paid for merchandise: Cost of goods sold$525,000 Merchandise inventory, December 31, 2013158,600 Accounts payable, December 31, 201366,700 Merchandise inventory, December 31, 2014130,400 Accounts payable, December 31, 201482,000 DateDebitCredit 525,000 28,200 15,300 481,500 Cost of goods sold Merchandise inventory Cash Accounts payable General Journal 12-9

10. Case X: Compute cash received from customers: Sales$430,000 Accounts receivable, December 31, 201343,000 Accounts receivable, December 31, 201459,340 Case Y: Compute cash paid for rent: Rent expense$105,600 Rent payable, December 31, 201312,900 Rent payable, December 31, 201411,610 Case Z: Compute cash paid for merchandise: Cost of goods sold$455,000 Merchandise inventory, December 31, 2013141,050 Accounts payable, December 31, 201359,241 Merchandise inventory, December 31, 2014115,661 Accounts payable, December 31, 201473,459 For each of the above three separate cases, use the information provided about the calendar-year 2014 operations of Sahim Company to compute the required cash flow information. Exercise 12-5 page 547 Algorithm 12-10

11. Case X: Compute cash received from customers: Sales$430,000 Accounts receivable, December 31, 201343,000 Accounts receivable, December 31, 201459,340 $413,660 DateDebitCredit 413,660 16,340 430,000 Cash Sales Accounts receivable General Journal Case Y: Compute cash paid for rent: Rent expense$105,600 Rent payable, December 31, 201312,900 Rent payable, December 31, 201411,610 $106,890 DateDebitCredit 105,600 1,290 106,890 Rent expense Rent payable Cash General Journal Exercise 12-5 page 547 Algorithm 12-11

12. Case Z: Compute cash paid for merchandise: Cost of goods sold$455,000 Merchandise inventory, December 31, 2013141,050 Accounts payable, December 31, 201359,241 Merchandise inventory, December 31, 2014115,661 Accounts payable, December 31, 201473,459 $415,393 DateDebitCredit 455,000 25,389 14,218 415,393 Cost of goods sold Merchandise inventory Cash Accounts payable General Journal Exercise 12-5 page 547 Algorithm 12-12

13. Exercise 12-6 page 547 12-13

14. Exercise 12-6 page 547 Sales$1,828,000 Cost of goods sold991,000 Gross profit837,000 Operating expenses Salaries expense$245,535 Depreciation expense44,200 Rent expense49,600 Amortization expense - Patents4,200 Utilities expense18,125 Total operating expenses361,660 475,340 Gain on sale of equipment6,200 Net income$481,540 Accounts receivable$30,500IncreaseAccounts payable$12,500Decrease Merchandise inventory25,000IncreaseSalaries payable3,500Decrease Sohad Company Income Statement For the year ended December 31, 2013 Prepare only the cash flows from operating activities section of the statement of cash flows for 2013 using the indirect method. Changes in current asset and current liability accounts for the year that relate to operating activities follow: The following income statement and information about changes in noncash current assets and current liabilities are reported. 12-14

15. Exercise 12-6 page 547 Cash flows from operating activities Net incomeStart assuming that NI = change in cash Adjustments to reconcile net income to operating cash flow:Correct for that assumption Income statement items (opposite direction):Why? + Noncash expenses (Depreciation, amortization)These expenses didn't reduce cash - Noncash revenues (Equity method earnings)These revenues didn't provide cash + Loss on sale of LT assetsCash flow is reported in the Investing activities section - Gain on sale of LT assets Balance sheet items:Think of it as a journal entry: Change in noncash operating assets (opposite direction)DebitCredit + Decreases in current operating assetsCashCurrent asset - Increases in current operating assetsCurrent assetCash Change in noncash operating liabilities (same direction) + Increases in current operating liabilitiesCashCurrent liability - Decreases in current operating liabilitiesCurrent liabilityCash Net cash provided (used) by operating activities Statement of Cash Flows - Indirect Method 12-15

16. Exercise 12-6 page 547 Accounts receivable$30,500IncreaseAccounts payable$12,500Decrease Merchandise inventory25,000IncreaseSalaries payable3,500Decrease Changes in current asset and current liability accounts for the year that relate to operating activities follow: Sales$1,828,000 Cost of goods sold991,000 Gross profit837,000 Operating expenses Salaries expense$245,535 Depreciation expense44,200 Rent expense49,600 Amortization expense - Patents4,200 Utilities expense18,125 Total operating expenses361,660 475,340 Gain on sale of equipment6,200 Net income$481,540 Sohad Company Income Statement For the year ended December 31, 2013 Cash flows from operating activities Net income$481,540 Adjustments to reconcile net income to operating cash flow: Depreciation expense$44,200 Amortization expense - Patents4,200 Gain on sale of equipment(6,200) Increase in Accounts receivable(30,500) Increase in Merchandise inventory(25,000) Decrease in Accounts payable(12,500) Decrease in Salaries payable(3,500) (29,300) Net cash provided by operating activities$452,240 Sohad Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 12-16

17. Sales$2,012,000 Cost of goods sold985,880 Gross profit1,026,120 Operating expenses Salaries expense$275,644 Depreciation expense48,288 Rent expense54,324 Amortization expense - Patents6,036 Utilities expense22,132 Total operating expenses406,424 619,696 Gain on sale of equipment8,048 Net income$627,744 Accounts receivable$18,100IncreaseAccounts payable$9,300Decrease Merchandise inventory18,200IncreaseSalaries payable5,550Decrease Sahim Company Income Statement For the year ended December 31, 2013 Prepare only the cash flows from operating activities section of the statement of cash flows for 2013 using the indirect method. Changes in current asset and current liability accounts for the year that relate to operating activities follow: The following income statement and information about changes in noncash current assets and current liabilities are reported. Exercise 12-6 page 547 Algorithm 12-17

18. Exercise 12-6 page 547 Algorithm Cash flows from operating activities Net incomeStart assuming that NI = change in cash Adjustments to reconcile net income to operating cash flow:Correct for that assumption Income statement items (opposite direction):Why? + Noncash expenses (Depreciation, amortization)These expenses didn't reduce cash - Noncash revenues (Equity method earnings)These revenues didn't provide cash + Loss on sale of LT assetsCash flow is reported in the Investing activities section - Gain on sale of LT assets Balance sheet items:Think of it as a journal entry: Change in noncash operating assets (opposite direction)DebitCredit + Decreases in current operating assetsCashCurrent asset - Increases in current operating assetsCurrent assetCash Change in noncash operating liabilities (same direction) + Increases in current operating liabilitiesCashCurrent liability - Decreases in current operating liabilitiesCurrent liabilityCash Net cash provided (used) by operating activities Statement of Cash Flows - Indirect Method 12-18

19. Accounts receivable$18,100IncreaseAccounts payable$9,300Decrease Merchandise inventory18,200IncreaseSalaries payable5,550Decrease Changes in current asset and current liability accounts for the year that relate to operating activities follow: Sales$2,012,000 Cost of goods sold985,880 Gross profit1,026,120 Operating expenses Salaries expense$275,644 Depreciation expense48,288 Rent expense54,324 Amortization expense - Patents6,036 Utilities expense22,132 Total operating expenses406,424 619,696 Gain on sale of equipment8,048 Net income$627,744 Sahim Company Income Statement For the year ended December 31, 2013 Cash flows from operating activities Net income$627,744 Adjustments to reconcile net income to operating cash flow: Depreciation expense$48,288 Amortization expense - Patents6,036 Gain on sale of equipment(8,048) Increase in Accounts Receivable(18,100) Increase in Merchandise Inventory(18,200) Decrease in Accounts Payable(9,300) Decrease in Salaries Payable(5,550) (4,874) Net cash provided by operating activities$622,870 Sahim Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 Exercise 12-6 page 547 Algorithm 12-19

20. Exercise 12-7 page 548 12-20

21. Exercise 12-7 page 548 Sales$1,828,000 Cost of goods sold991,000 Gross profit837,000 Operating expenses Salaries expense$245,535 Depreciation expense44,200 Rent expense49,600 Amortization expense - Patents4,200 Utilities expense18,125 Total operating expenses361,660 475,340 Gain on sale of equipment6,200 Net income$481,540 Accounts receivable$30,500IncreaseAccounts payable$12,500Decrease Merchandise inventory25,000IncreaseSalaries payable3,500Decrease Sohad Company Income Statement For the year ended December 31, 2013 Prepare only the cash flows from operating activities section of the statement of cash flows for 2013 using the direct method. Changes in current asset and current liability accounts for the year that relate to operating activities follow: The following income statement and information about changes in noncash current assets and current liabilities are reported. 12-21

22. Exercise 12-7 page 548 Sales$1,828,000 Cost of goods sold991,000 Gross profit837,000 Operating expenses Salaries expense$245,535 Depreciation expense44,200 Rent expense49,600 Amortization expense - Patents4,200 Utilities expense18,125 Total operating expenses361,660 475,340 Gain on sale of equipment6,200 Net income$481,540 Sohad Company Income Statement For the year ended December 31, 2013 Accounts receivable$30,500Increase Accounts payable 12,500Decrease Merchandise inventory25,000Increase Salaries payable3,500Decrease Cash flows from operating activities Receipts from customers$1,797,500 Payments for merchandise(1,028,500) Payments for salaries(249,035) Payments for rent(49,600) Payments for utilities(18,125) Net cash provided by operating activities$452,240 Sohad Company Statement of Cash Flows (partial) - Direct Method For the year ended December 31, 2013 DateDebitCredit 1,797,500 30,500 1,828,000 991,000 25,000 12,500 1,028,500 245,535 3,500 249,035 Salaries payable Cash Merchandise inventory Accounts payable Cash Salaries expense Cost of goods sold General Journal Cash Accounts receivable Sales 12-22

23. Sales$2,012,000 Cost of goods sold985,880 Gross profit1,026,120 Operating expenses Salaries expense$275,644 Depreciation expense48,288 Rent expense54,324 Amortization expense - Patents6,036 Utilities expense22,132 Total operating expenses406,424 619,696 Gain on sale of equipment8,048 Net income$627,744 Accounts receivable$18,100IncreaseAccounts payable$9,300Decrease Merchandise inventory18,200IncreaseSalaries payable5,550Decrease Sahim Company Income Statement For the year ended December 31, 2013 Prepare only the cash flows from operating activities section of the statement of cash flows for 2013 using the direct method. Changes in current asset and current liability accounts for the year that relate to operating activities follow: The following income statement and information about changes in noncash current assets and current liabilities are reported. Exercise 12-7 page 548 Algorithm 12-23

24. Accounts receivable$18,100IncreaseAccounts payable$9,300Decrease Merchandise inventory18,200IncreaseSalaries payable5,550Decrease Changes in current asset and current liability accounts for the year that relate to operating activities follow: Sales$2,012,000 Cost of goods sold985,880 Gross profit1,026,120 Operating expenses Salaries expense$275,644 Depreciation expense48,288 Rent expense54,324 Amortization expense - Patents6,036 Utilities expense22,132 Total operating expenses406,424 619,696 Gain on sale of equipment8,048 Net income$627,744 Sahim Company Income Statement For the year ended December 31, 2013 DebitCredit 1,993,900 18,100 2,012,000 985,880 18,200 9,300 1,013,380 275,644 5,550 281,194 Salaries payable Cash Merchandise inventory Accounts payable Cash Salaries expense Cost of goods sold General Journal Cash Accounts receivable Sales Exercise 12-7 page 548 Algorithm 12-24

25. Sales$2,012,000 Cost of goods sold985,880 Gross profit1,026,120 Operating expenses Salaries expense$275,644 Depreciation expense48,288 Rent expense54,324 Amortization expense - Patents6,036 Utilities expense22,132 Total operating expenses406,424 619,696 Gain on sale of equipment8,048 Net income$627,744 Sahim Company Income Statement For the year ended December 31, 2013 DebitCredit 1,993,900 18,100 2,012,000 985,880 18,200 9,300 1,013,380 275,644 5,550 281,194 Salaries payable Cash Merchandise inventory Accounts payable Cash Salaries expense Cost of goods sold General Journal Cash Accounts receivable Sales Cash flows from operating activities Receipts from customers$1,993,900 Payments for merchandise(1,013,380) Payments for salaries(281,194) Payments for rent(54,324) Payments for utilities(22,132) Net cash provided by operating activities$622,870 Sahim Company Statement of Cash Flows (partial) - Direct Method For the year ended December 31, 2013 Exercise 12-7 page 548 Algorithm 12-25

26. Cash flows from operating activities Receipts from customers$1,993,900 Payments for merchandise(1,013,380) Payments for salaries(281,194) Payments for rent(54,324) Payments for utilities(22,132) Net cash provided by operating activities$622,870 Sahim Company Statement of Cash Flows (partial) - Direct Method For the year ended December 31, 2013 Cash flows from operating activities Net income$627,744 Adjustments to reconcile net income to operating cash flow: Depreciation expense$48,288 Amortization expense - Patents6,036 Gain on sale of equipment(8,048) Increase in Accounts Receivable(18,100) Increase in Merchandise Inventory(18,200) Decrease in Accounts Payable(9,300) Decrease in Salaries Payable(5,550) (4,874) Net cash provided by operating activities$622,870 Sahim Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 Exercise 12-7 page 548 Algorithm 12-26

27. Exercise 12-8 page 548 12-27

28. Exercise 12-8 page 548 a.Equipment with a book value of $65,300, and an original cost of $133,000 was sold at a loss of $14,000. b.Paid $89,000 cash for a new truck. c.Sold land costing $154,000 for $198,000 cash, yielding a gain of $44,000. d.Long-term investments in stock were sold for $60,800 cash, yielding a gain of $4,150. Use the above information to determine this company's cash flows from investing activities. Cash flows from investing activities Cash received from the sale of equipment$51,300 DateDebitCredit 51,300 67,700 14,000 133,000 Cash Accumulated depreciation - Equipment Loss on sale of equipment Equipment General Journal 12-28

29. Exercise 12-8 page 548 a.Equipment with a book value of $65,300, and an original cost of $133,000 was sold at a loss of $14,000. b.Paid $89,000 cash for a new truck. c.Sold land costing $154,000 for $198,000 cash, yielding a gain of $44,000. d.Long-term investments in stock were sold for $60,800 cash, yielding a gain of $4,150. Cash flows from investing activities Cash received from the sale of equipment$51,300 Cash paid for the new truck(89,000) Cash received from the sale of land198,000 Cash received from the sale of long-term investments in stock60,800 Net cash provided by investing activities$221,100 DateDebitCredit 89,000 DateDebitCredit 198,000 44,000 154,000 DateDebitCredit 60,800 4,150 56,650 Cash Land Long-term investments in stock General Journal Gain on sale of land Cash Truck Cash Gain on sale of long-term investments in stock 12-29

30. a.Equipment with a book value of $82,000, and an original cost of $166,000 was sold at a loss of $34,000. b.Paid $109,000 cash for a new truck. c.Sold land costing $320,000 for $415,000 cash, yielding a gain of $95,000. d.Long-term investments in stock were sold for $92,100 cash, yielding a gain of $15,500. Use the above information to determine this company's cash flows from investing activities. Exercise 12-8 page 548 Algorithm 12-30

31. a.Equipment with a book value of $82,000, and an original cost of $166,000 was sold at a loss of $34,000. b.Paid $109,000 cash for a new truck. c.Sold land costing $320,000 for $415,000 cash, yielding a gain of $95,000. d.Long-term investments in stock were sold for $92,100 cash, yielding a gain of $15,500. Cash flows from investing activities Cash received from the sale of equipment$48,000 Cash paid for the new truck(109,000) DateDebitCredit 48,000 84,000 34,000 166,000 Cash Accumulated depreciation - Equipment Loss on sale of equipment Equipment General Journal Exercise 12-8 page 548 Algorithm 12-31

32. a.Equipment with a book value of $82,000, and an original cost of $166,000 was sold at a loss of $34,000. b.Paid $109,000 cash for a new truck. c.Sold land costing $320,000 for $415,000 cash, yielding a gain of $95,000. d.Long-term investments in stock were sold for $92,100 cash, yielding a gain of $15,500. Cash flows from investing activities Cash received from the sale of equipment$48,000 Cash paid for the new truck(109,000) Cash received from the sale of land415,000 Cash received from the sale of long-term investments in stock92,100 Net cash provided by investing activities$446,100 DateDebitCredit 92,100 15,500 76,600Long-term investments in stock General Journal Cash Gain on sale of long-term investments in stock Exercise 12-8 page 548 Algorithm 12-32

33. Exercise 12-9 page 548 12-33

34. Exercise 12-9 page 548 a.Net income was $35,000. b.Issued common stock for $64,000 cash. c.Paid cash dividend of $14,600. d.Paid $50,000 cash to settle a note payable at its $50,000 maturity value. e.Paid $12,000 cash to acquire its treasury stock. f.Purchased equipment for $39,000 cash. Use the above information to determine this company's cash flows from financing activities. Cash flows from financing activities Proceeds for issuance of common stock Paid cash dividend Repaid note payable Purchased treasury stock Net cash used by financing activities($12,600) $64,000 (14,600) (50,000) (12,000) 12-34

35. a.Net income was $473,000. b.Issued common stock for $73,000 cash. c.Paid cash dividend of $11,000. d.Paid $130,000 cash to settle a note payable at its $130,000 maturity value. e.Paid $116,000 cash to acquire its treasury stock. f.Purchased equipment for $90,000 cash. Use the above information to determine this company's cash flows from financing activities. Cash flows from financing activities Proceeds for issuance of common stock Paid cash dividend Repaid note payable Purchased treasury stock Net cash used by financing activities($184,000) $73,000 (11,000) (130,000) (116,000) Exercise 12-9 page 548 Algorithm 12-35

36. Exercise 12-10 page 548 12-36

37. Exercise 12-10 page 548 a.A $30,000 note payable is retired at its $30,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. c.New equipment is acquired for $57,600 cash. d.Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain. e.Prepaid expenses and Wages payable relate to Other expenses on the income statement. f.All purchases and sales of merchandise inventory are on credit. Prepare a statement of cash flows for the year ended June 30, 2013 using the indirect method. The following financial statements and additional information are reported: 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 IKIBAN INC. Income Statement For the year ended June 30, 2013 12-37

38. Exercise 12-10 page 548 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 IKIBAN INC. Income Statement For the year ended June 30, 2013 Cash flows from operating activities Net income$99,510 Adjustments to reconcile net income to operating cash flow: Depreciation expense$58,600 Gain on sale of equipment(2,000) Cash flows from investing activities Cash flows from financing activities Net increase in cash IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 12-38

39. Exercise 12-10 page 548 Cash flows from operating activities Net income$99,510 Adjustments to reconcile net income to operating cash flow: Depreciation expense$58,600 Gain on sale of equipment(2,000) Increase in Accounts receivable, net(14,000) Decrease in Inventory22,700 Decrease in Prepaid expenses1,000 Decrease in Accounts payable(5,000) Decrease in Wages payable(9,000) Decrease in Income taxes payable(400)51,900 Net cash provided by operating activities151,410 Cash flows from investing activities Cash received sale of equipment$10,000 Cash paid for equipment(57,600) Net cash used by investing activities(47,600) Cash flows from financing activities Net increase in cash IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 c.New equipment is acquired for $57,600 cash. d.Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain. 115,000 57,60048,600 124,000 9,000 40,60058,600 27,000 Equipment Accum. Depr The book value of the equipment sold was $8,000 ($48,600 cost - $40,600) accumulated depreciation. Since it was sold at a gain, cash receipt was $10,000. 12-39

40. Exercise 12-10 page 548 Cash flows from operating activities Net income$99,510 Adjustments to reconcile net income to operating cash flow: Depreciation expense$58,600 Gain on sale of equipment(2,000) Increase in Accounts receivable, net(14,000) Decrease in Inventory22,700 Decrease in Prepaid expenses1,000 Decrease in Accounts payable(5,000) Decrease in Wages payable(9,000) Decrease in Income taxes payable(400)51,900 Net cash provided by operating activities151,410 Cash flows from investing activities Cash received sale of equipment$10,000 Cash paid for equipment(57,600) Net cash used by investing activities(47,600) Cash flows from financing activities Cash received from stock issuance$60,000 Cash paid to retire notes(30,000) Cash paid for dividends(90,310) Net cash used by financing activities(60,310) Net increase in cash$43,500 Cash balance at June 30, 201244,000 Cash balance at June 30, 2013$87,500 IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 a.A $30,000 note payable is retired at its $30,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. $24,100 + $99,510 – Dividends = $33,300 Dividends = $90,310 12-40

41. a.A $25,000 note payable is retired at its $25,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. e.Prepaid expenses and Wages payable relate to Other expenses on the income statement. f.All purchases and sales of merchandise inventory are on credit. Prepare a statement of cash flows for the year ended June 30, 2013 using the indirect method. The following financial statements and additional information are reported: Sales$672,000 Cost of goods sold410,000 Gross profit262,000 Operating expenses Other expenses$66,600 Depreciation expense57,800 Total operating expenses124,400 137,600 Gain on sale of equipment2,400 Income before taxes140,000 Income taxes expense56,000 Net income$84,000 IKIBAN INC. Income Statement For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Exercise 12-10 page 548 Algorithm 12-41

42. Sales$672,000 Cost of goods sold410,000 Gross profit262,000 Operating expenses Other expenses$66,600 Depreciation expense57,800 Total operating expenses124,400 137,600 Gain on sale of equipment2,400 Income before taxes140,000 Income taxes expense56,000 Net income$84,000 IKIBAN INC. Income Statement For the year ended June 30, 2013 Cash flows from operating activities Net income$84,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$57,800 Gain on sale of equipment(2,400) Cash flows from investing activities Cash flows from financing activities IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 Exercise 12-10 page 548 Algorithm 12-42

43. Cash flows from operating activities Net income$84,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$57,800 Gain on sale of equipment(2,400) Increase in Accounts receivable, net(18,100) Decrease in Inventory29,700 Decrease in Prepaid expenses1,900 Decrease in Accounts payable(6,200) Decrease in Wages payable(9,500) Decrease in Income taxes payable(1,700)51,500 Net cash provided by operating activities135,500 Cash flows from investing activities Cash paid for equipment(60,100) Cash flows from financing activities IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. Exercise 12-10 page 548 Algorithm 12-43

44. 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. 115,000 60,10048,800 126,300 10,700 39,90057,800 28,600 Equipment Accum. Depr Cost$48,800 Accumulated depreciation(39,900) Book Value$8,900 Gain on sale of equipment2,400 Cash received from sale$11,300 Exercise 12-10 page 548 Algorithm 12-44

45. Cash flows from operating activities Net income$84,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$57,800 Gain on sale of equipment(2,400) Increase in Accounts receivable, net(18,100) Decrease in Inventory29,700 Decrease in Prepaid expenses1,900 Decrease in Accounts payable(6,200) Decrease in Wages payable(9,500) Decrease in Income taxes payable(1,700)51,500 Net cash provided by operating activities135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) Cash flows from financing activities IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. Exercise 12-10 page 548 Algorithm 12-45

46. Cash flows from operating activities Net income$84,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$57,800 Gain on sale of equipment(2,400) Increase in Accounts receivable, net(18,100) Decrease in Inventory29,700 Decrease in Prepaid expenses1,900 Decrease in Accounts payable(6,200) Decrease in Wages payable(9,500) Decrease in Income taxes payable(1,700)51,500 Net cash provided by operating activities135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) Cash flows from financing activities Cash received from stock issuance$49,000 Cash paid to retire notes(25,000) Cash paid for dividends(67,000) Net cash used by financing activities(43,000) Net increase in cash$43,700 Cash balance at June 30, 201257,100 Cash balance at June 30, 2013$100,800 IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 aA $25,000 note payable is retired at its $25,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. Exercise 12-10 page 548 Algorithm 12-46

47. Cash flows from operating activities Net income$84,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$57,800 Gain on sale of equipment(2,400) Increase in Accounts receivable, net(18,100) Decrease in inventory29,700 Decrease in Prepaid expenses1,900 Decrease in Accounts payable(6,200) Decrease in Wages payable(9,500) Decrease in Income taxes payable(1,700)51,500 Net cash provided by operating activities135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) Cash flows from financing activities Cash received from stock issuance$49,000 Cash paid to retire notes(25,000) Cash paid for dividends(67,000) Net cash used by financing activities(43,000) Net increase in cash$43,700 Cash balance at June 30, 201257,100 Cash balance at June 30, 2013$100,800 IKIBAN Inc. Company Statement of Cash Flows - Indirect Method For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Compute the company's cash flow on total assets ratio for its fiscal year 2013. $135,500 $326,800 Operating cash flows Average total assets $135,500 ($315,000 + $338,600) / 2 41.5% Exercise 12-10 page 548 Algorithm 12-47

48. Exercise 12-11 page 549 12-48

49. Exercise 12-11 page 549 a.A $30,000 note payable is retired at its $30,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. c.New equipment is acquired for $57,600 cash. d.Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain. e.Prepaid expenses and Wages payable relate to Other expenses on the income statement. f.All purchases and sales of merchandise inventory are on credit. Prepare a statement of cash flows for the year ended June 30, 2013 using the direct method. The following financial statements and additional information are reported: 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 IKIBAN INC. Income Statement For the year ended June 30, 2013 12-49

50. Exercise 12-11 page 549 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 Income Statement 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 Comparative Balance Sheets DebitCredit 664,000 14,000 678,000 411,000 5,000 22,700 393,300 67,000 9,000 1,000 75,000 43,890 400 44,290 Cash Accounts receivable, net Sales Cost of goods sold General Journal Cash Wages payable Cash Prepaid expenses Income taxes expense Inventory Accounts payable Cash Other expenses Income taxes payable Cash flows from operating activities Receipts from customers$664,000 Payments for merchandise(393,300) Payments for other expenses(75,000) Payments for income taxes(44,290) $151,410 Cash flows from investing activities Cash flows from financing activities IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 Net cash provided by operating activities 12-50

51. Exercise 12-11 page 549 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 Income Statement 20132012 Assets Cash$87,500$44,000 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 Comparative Balance Sheets Cash flows from operating activities Receipts from customers$664,000 Payments for merchandise(393,300) Payments for other expenses(75,000) Payments for income taxes(44,290) Net cash provided by operating activities$151,410 Cash flows from investing activities Cash received from sale of equipment$10,000 Cash paid for equipment(57,600) Net cash used by investing activities(47,600) Cash flows from financing activities IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 c.New equipment is acquired for $57,600 cash. d.Received cash for the sale of equipment that had cost $48,600, yielding a $2,000 gain. 115,000 57,60048,600 124,000 9,000 40,60058,600 27,000 Equipment Accum. Depr The book value of the equipment sold was $8,000 ($48,600 cost - $40,600 accumulated depreciation.) Since it was sold at a gain, cash receipt was $10,000. 12-51

52. Exercise 12-11 page 549 Sales$678,000 Cost of goods sold411,000 Gross profit267,000 Operating expenses Other expenses$67,000 Depreciation expense58,600 Total operating expenses125,600 141,400 Gain on sale of equipment2,000 Income before taxes143,400 Income taxes expense43,890 Net income$99,510 Income Statement 20132012 Assets Cash$87,500$44,000 Accounts receivable, net65,00051,000 Inventory63,80086,500 Prepaid expenses4,4005,400 Equipment124,000115,000 Accum. Depreciation - Equipment(27,000)(9,000) Total Assets$317,700$292,900 Liabilities and equity Accounts payable$25,000$30,000 Wages payable6,00015,000 Income taxes payable3,4003,800 Notes payable (long-term)30,00060,000 Common stock, $5 par value220,000160,000 Retained earnings33,30024,100 Total Liabilities and Equity$317,700$292,900 Comparative Balance Sheets Cash flows from operating activities Receipts from customers$664,000 Payments for merchandise(393,300) Payments for other expenses(75,000) Payments for income taxes(44,290) Net cash provided by operating activities$151,410 Cash flows from investing activities Cash received from sale of equipment$10,000 Cash paid for equipment(57,600) Net cash used by investing activities(47,600) Cash flows from financing activities Cash received from stock issuance$60,000 Cash paid to retire notes(30,000) Cash paid for dividends(90,310) Net cash used by financing activities(60,310) Net increase in cash$43,500 Cash balance at June 30, 201244,000 Cash balance at June 30, 2013$87,500 IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 a.A $30,000 note payable is retired at its $30,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. $24,100 + $99,510 – Dividends = $33,300 Dividends = $90,310 12-52

53. a.A $25,000 note payable is retired at its $25,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. e.Prepaid expenses and Wages payable relate to Other expenses on the income statement. f.All purchases and sales of merchandise inventory are on credit. Prepare a statement of cash flows for the year ended June 30, 2013 using the direct method. The following financial statements and additional information are reported: Sales$672,000 Cost of goods sold410,000 Gross profit262,000 Operating expenses Other expenses$66,600 Depreciation expense57,800 Total operating expenses124,400 137,600 Gain on sale of equipment2,400 Income before taxes140,000 Income taxes expense56,000 Net income$84,000 IKIBAN INC. Income Statement For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Exercise 12-11 page 549 Algorithm 12-53

54. Cash flows from operating activities Receipts from customers$653,900 Payments for merchandise(386,500) Payments for other expenses(74,200) Payments for income taxes(57,700) Net cash provided by operating activities$135,500 IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 Sales$672,000 Cost of goods sold410,000 Gross profit262,000 Operating expenses Other expenses$66,600 Depreciation expense57,800 Total operating expenses124,400 137,600 Gain on sale of equipment2,400 Income before taxes140,000 Income taxes expense56,000 Net income$84,000 IKIBAN INC. Income Statement For the year ended June 30, 2013 DebitCredit 653,900 18,100 672,000 410,000 6,200 29,700 386,500 66,600 9,500 1,900 74,200 56,000 1,700 57,700 Cash Accounts receivable, net Sales Cost of goods sold Income taxes payable Cash Wages payable Cash Prepaid expenses Income taxes expense Inventory Accounts payable Cash Other expenses 20132012 Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 e.Prepaid expenses and Wages payable relate to Other expenses on the income statement. Exercise 12-11 page 549 Algorithm 12-54

55. Cash flows from operating activities Receipts from customers$653,900 Payments for merchandise(386,500) Payments for other expenses(74,200) Payments for income taxes(57,700) Net cash provided by operating activities$135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 20132012 Assets Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 115,000 60,10048,800 126,300 10,700 39,90057,800 28,600 Equipment Accum. Depr c.New equipment is acquired for $60,100 cash. d.Received cash for the sale of equipment that had cost $48,800, yielding a $2,400 gain. Cost$48,800 Accumulated depreciation(39,900) Book Value$8,900 Gain on sale of equipment2,400 Cash received from sale$11,300 Income Statement: Depreciation expense$57,800 Gain on sale of equipment 2,400 Exercise 12-11 page 549 Algorithm 12-55

56. Cash flows from operating activities Receipts from customers$653,900 Payments for merchandise(386,500) Payments for other expenses(74,200) Payments for income taxes(57,700) Net cash provided by operating activities$135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) Cash flows from financing activities Cash received from stock issuance$49,000 Cash paid to retire notes(25,000) Cash paid for dividends(67,000) Net cash used by financing activities(43,000) Net increase in cash$43,700 IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 20132012 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 aA $25,000 note payable is retired at its $25,000 carrying (book value) in exchange for cash. b.The only changes affecting retained earnings are net income and cash dividends paid. 7,900 67,00084,000 24,900 Retained Earnings Exercise 12-11 page 549 Algorithm 12-56

57. Cash flows from operating activities Receipts from customers$653,900 Payments for merchandise(386,500) Payments for other expenses(74,200) Payments for income taxes(57,700) Net cash provided by operating activities$135,500 Cash flows from investing activities Cash received from sale of equipment$11,300 Cash paid for equipment(60,100) Net cash used by investing activities(48,800) Cash flows from financing activities Cash received from stock issuance$49,000 Cash paid to retire notes(25,000) Cash paid for dividends(67,000) Net cash used by financing activities(43,000) Net increase in cash$43,700 Cash balance at June 30, 201257,100 Cash balance at June 30, 2013$100,800 IKIBAN Inc. Company Statement of Cash Flows - Direct Method For the year ended June 30, 2013 20132012 Assets Cash$100,800$57,100 Accounts receivable, net69,70051,600 Inventory66,10095,800 Prepaid expenses4,3006,200 Equipment126,300115,000 Accum. Depreciation - Equipment(28,600)(10,700) Total Assets$338,600$315,000 Liabilities and equity Accounts payable$26,100$32,300 Wages payable7,50017,000 Income taxes payable2,1003,800 Notes payable (long-term)46,00071,000 Common stock, $5 par value232,000183,000 Retained earnings24,9007,900 Total Liabilities and Equity$338,600$315,000 IKIBAN INC. Comparative Balance Sheets June 30, 2013 and 2012 Compute the company's cash flow on total assets ratio for its fiscal year 2013. $135,500 $326,800 Operating cash flows Average total assets $135,500 ($315,000 + $338,600) / 2 41.5% Exercise 12-11 page 549 Algorithm 12-57

58. Exercise 12-12 page 549 12-58

59. Exercise 12-12 page 549 Sales$160,000 Cost of goods sold$100,000 Salaries expense24,000 Depreciation expense12,000 Net income$24,000 Accounts receivable$10,000Increase Merchandise inventory16,000Decrease Salaries payable1,000Increase Income Statement Hampton Company reports the following information for its recent calendar year. Changes in current asset and current liability accounts for the year that relate to operating activities follow: Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method. 12-59

60. Exercise 12-12 page 549 Sales$160,000 Cost of goods sold$100,000 Salaries expense24,000 Depreciation expense12,000 Net income$24,000 Accounts receivable$10,000Increase Merchandise inventory16,000Decrease Salaries payable1,000Increase Cash flows from operating activities Net income$24,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$12,000 Increase in Accounts receivable(10,000) Decrease in Merchandise inventory16,000 Increase in Salaries payable1,00019,000 Net cash provided by operating activities$43,000 Income Statement Hampton Company Company Statement of Cash Flows (partial) - Indirect Method For the year ended December 31, 2013 12-60

61. Sales$78,000 Cost of goods sold$39,000 Salaries expense14,000 Depreciation expense5,000 Net income$20,000 Accounts receivable$6,000Increase Merchandise inventory3,000Decrease Salaries payable600Increase Prepare the operating activities section of the statement of cash flows for Hampton Company using the indirect method. Income Statement Hampton Company reports the following information for its recent calendar year. Exercise 12-12 page 549 Algorithm 12-61

62. Cash flows from operating activities Net income$20,000 Adjustments to reconcile net income to operating cash flow: Depreciation expense$5,000 Increase in Accounts Receivable(6,000) Decrease in Merchandise Inventory3,000 Increase in Salaries Payable6002,600 Net cash provided by operating activities$22,600 Hampton Company Company Statement of Cash Flows (partial) - Indirect Method Sales$78,000 Cost of goods sold$39,000 Salaries expense14,000 Depreciation expense5,000 Net income$20,000 Accounts receivable$6,000Increase Merchandise inventory3,000Decrease Salaries payable600Increase Income Statement Hampton Company reports the following information for its recent calendar year. Exercise 12-12 page 549 Algorithm 12-62

63. Exercise 12-13 page 549 12-63

64. Exercise 12-13 page 549 Revenues$100,000 Operating expenses Salaries expense$84,000 Utilities expense14,000 Depreciation expense14,600 Other expenses3,400 Total operating expenses116,000 Net loss($16,000) Decrease in Accounts receivable$24,000 Purchased a Machine$10,000 Increase in Salaries payable18,000 Decrease in Other accrued liabilities8,000 The following income statement and information about changes in noncash current assets and current liabilities are reported. Arundel Company Income Statement For the year ended December 31, 2013 Prepare the operating activities section of the statement of cash flows using the indirect method. 12-64

65. Exercise 12-13 page 549 Revenues$100,000 Operating expenses Salaries expense$84,000 Utilities expense14,000 Depreciation expense14,600 Other expenses3,400 Total operating expenses116,000 Net loss($16,000) Decrease in Accounts receivable$24,000 Purchased a Machine$10,000 Increase in Salaries payable18,000 Decrease in Other accrued liabilities8,000 Cash flows from operating activities Net loss($16,000) Adjustments to reconcile net income to operating cash flow: Depreciation expense$14,600 Decrease in Accounts receivable24,000 Increase in Salaries payable18,000 Decrease in Other accrued liabilities(8,000) Net cash provided by operating activities$32,600 Arundel Company Income Statement For the year ended December 31, 2013 Arundel Company Statement of Cash Flows (partial) - Indirect Method 12-65

66. Revenues$85,000 Operating expenses Salaries expense$70,000 Utilities expense35,000 Depreciation expense31,400 Other expenses7,200 Total operating expenses143,600 Net loss($58,600) Decrease in Accounts Receivable$24,000 Purchased a Machine$20,000 Increase in Salaries Payable26,000 Decrease in Other Accrued Liabilities15,000 For the year ended December 31, 2013 Prepare the operating activities section of the statement of cash flows using the indirect method. The following income statement and information about changes in noncash current assets and current liabilities are reported. Arundel Company Income Statement Exercise 12-13 page 549 Algorithm 12-66

67. Revenues$85,000 Operating expenses Salaries expense$70,000 Utilities expense35,000 Depreciation expense31,400 Other expenses7,200 Total operating expenses143,600 Net loss($58,600) Decrease in Accounts Receivable$24,000 Purchased a Machine$20,000 Increase in Salaries Payable26,000 Decrease in Other Accrued Liabilities15,000 Cash flows from operating activities Net loss($58,600) Adjustments to reconcile net income to operating cash flow: Depreciation Expense$31,400 Decrease in Accounts Receivable24,000 Increase in Salaries Payable26,000 Decrease in Other Accrued Liabilities(15,000) Net cash provided by operating activities$7,800 For the year ended December 31, 2013 Arundel Company Statement of Cash Flows (partial) - Indirect Method Arundel Company Income Statement Cash flows from operating activities Net income (loss) Adjustments to reconcile net income to operating cash flow: Income statement items (opposite direction): + Noncash expenses (Depreciation, amortization) - Noncash revenues (Equity method earnings) + Loss on sale of LT assets - Gain on sale of LT assets Balance sheet items: Change in noncash operating assets (opposite direction) + Decreases in current operating assets - Increases in current operating assets Change in noncash operating liabilities (same direction) + Increases in current operating liabilities - Decreases in current operating liabilities Net cash provided (used) by operating activities Statement of Cash Flows - Indirect Method Exercise 12-13 page 549 Algorithm 12-67

68. Exercise 12-14 page 549 12-68

69. Exercise 12-14 page 549 a.Net income for the year was $100,000. b.Dividends of $80,000 cash were declared and paid. c.Scoreteck's only noncash expense was depreciation expense of $70,000. d.The company purchased plant assets for $70,000 cash. e.Notes payable of $20,000 were issued for $20,000 cash. 12/31/2012DebitCredit12/31/2013 Balance sheet - debit balance accounts Cash$80,000$60,000 Accounts receivable, net120,00070,000190,000 Merchandise inventory250,00020,000230,000 Plant assets600,00070,000670,000 $1,050,000$1,150,000 Balance sheet - credit balance accounts Accum. Depreciation - Equipment$100,00070,000$170,000 Accounts payable150,00010,000140,000 Notes payable (long-term)370,00020,000390,000 Common stock, $5 par value200,000 Retained earnings230,00080,000100,000250,000 $1,050,000$1,150,000 Complete the following spreadsheet in preparation of the statement of cash flows. (The statement of cash flows is not required.) Report operating activities under the indirect method 12-69

70. Exercise 12-14 page 549 a.Net income for the year was $100,000. b.Dividends of $80,000 cash were declared and paid. c.Scoreteck's only noncash expense was depreciation expense of $70,000. d.The company purchased plant assets for $70,000 cash. e.Notes payable of $20,000 were issued for $20,000 cash. 12/31/2012DebitCredit12/31/2013 Balance sheet - debit balance accounts Cash$80,000$60,000 Accounts receivable, net120,00070,000190,000 Merchandise inventory250,00020,000230,000 Plant assets600,00070,000670,000 $1,050,000$1,150,000 Balance sheet - credit balance accounts Accum. Depreciation - Equipment$100,00070,000$170,000 Accounts payable150,00010,000140,000 Notes payable (long-term)370,00020,000390,000 Common stock, $5 par value200,000 Retained earnings230,00080,000100,000250,000 $1,050,000$1,150,000 Statement of Cash Flows Operating activities Net income100,000 Depreciation expense70,000 Increase in Accounts receivable, net70,000 Decrease in Merchandise inventory20,000 Decrease in Accounts payable10,000 Investing activities Cash paid to purchase plant assets70,000 Financing activities Cash paid for dividends80,000 Cash received from note payable20,000 $440,000 12-70

71. Complete the following spreadsheet in preparation of the statement of cash flows. (The statement of cash flows is not required.) Report operating activities under the indirect method. 12/31/2012DebitCredit12/31/2013 Balance sheet - debit balance accounts Cash$218,000$289,000 Accounts receivable, net132,000211,000 Merchandise inventory274,000247,000 Plant assets612,000704,000 $1,236,000$1,451,000 Balance sheet - credit balance accounts Accum. Depreciation - Equipment$184,000$244,000 Accounts payable166,000149,000 Notes payable (long-term)382,000458,000 Common stock, $5 par value229,000 Retained earnings275,000371,000 $1,236,000$1,451,000 a.Net income for the year was $240,000. b.Dividends of $144,000 cash were declared and paid. c.Scoreteck's only noncash expense was depreciation expense of $60,000. d.The company purchased plant assets for $92,000 cash. e.Notes payable of $76,000 were issued for $76,000 cash. Exercise 12-14 page 549 Algorithm 12-71 a. Net income for the year was $240,000. b. Dividends of $144,000 cash were declared and paid. c.Scoreteck's only noncash expense was depreciation expense of $60,000. d.The company purchased plant assets for $92,000 cash. e. Notes payable of $76,000 were issued for $76,000 cash.

72. 12/31/2012 Debit Credit12/31/2013 Balance sheet - debit balance accounts Cash$218,000$289,000 Accounts receivable, net132,00079,000211,000 Merchandise inventory274,00027,000247,000 Plant assets612,00092,000704,000 $1,236,000$1,451,000 Balance sheet - credit balance accounts Accum. Depreciation - Equipment$184,00060,000$244,000 Accounts payable166,00017,000149,000 Notes payable (long-term)382,00076,000458,000 Common stock, $5 par value229,000 Retained earnings275,000144,000240,000371,000 $1,236,000$1,451,000 Statement of Cash Flows Operating activities Net income240,000 Depreciation expense60,000 Increase in Accounts receivable, net79,000 Decrease in Merchandise inventory27,000 Decrease in Accounts payable17,000 Investing activities Cash paid to purchase plant assets92,000 Financing activities Cash paid for dividends144,000 Cash received from note payable76,000 $735,000 $231,000 (92,000) (68,000) $71,000 Exercise 12-14 page 549 Algorithm 12-72

73. Exercise 12-15 page 550 12-73

74. Exercise 12-15 page 550 Cash and cash equivalents balance, December 31, 2012$40,000 Cash and cash equivalents balance, December 31, 2013148,000 Cash received as interest3,500 Cash paid for salaries76,500 Bonds payable retired by issuing common stock (no gain or loss on retirement)185,500 Cash paid to retire long-term notes payable100,000 Cash received from sale of equipment60,250 Cash received in exchange for six-month note payable35,000 Land purchased by issuing long-term note payable105,250 Cash paid for store equipment24,750 Cash dividends paid10,000 Cash paid for other expenses20,000 Cash received from customers495,000 Cash paid for merchandise254,500 Use the above information about the cash flows of Ferron Company to prepare a complete statement of cash flows (direct method) for the year ended December 31, 2013. 12-74

75. Exercise 12-15 page 550 Cash and cash equivalents balance, December 31, 2012$40,000 Cash and cash equivalents balance, December 31, 2013148,000 Cash received as interest3,500 Cash paid for salaries76,500 Bonds payable retired by issuing common stock (no gain or loss on retirement) 185,500 Cash paid to retire long-term notes payable100,000 Cash received from sale of equipment60,250 Cash received in exchange for six-month note payable35,000 Land purchased by issuing long-term note payable105,250 Cash paid for store equipment24,750 Cash dividends paid10,000 Cash paid for other expenses20,000 Cash received from customers495,000 Cash paid for merchandise254,500 Cash flows from operating activities Cash received from customers$495,000 Cash received as interest3,500 Cash paid for merchandise(254,500) Cash paid for salaries(76,500) Cash paid for other expenses(20,000) Net cash provided by operating activities$147,500 Cash flows from investing activities Cash received from sale of equipment$60,250 Cash paid for store equipment(24,750) Net cash provided by investing activities35,500 Cash flows from financing activities Cash paid to retire long-term notes payable($100,000) Cash received in exchange for six-month note payable35,000 Cash dividends paid(10,000) Net cash used by financing activities(75,000) Net increase in cash$108,000 Cash and cash equivalents balance, December 31, 201240,000 Cash and cash equivalents balance, December 31, 2013$148,000 Noncash investing and financing activities: $185,500 $105,250 FERRON COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 Bonds payable retired by issuing common stock (no gain or loss on retirement) Land purchased by issuing long-term note payable 12-75

76. Exercise 12-15 page 550 Algorithm Cash and cash equivalents balance, December 31, 2012$21,000 Cash and cash equivalents balance, December 31, 201359,052 Cash received as interest2,100 Cash paid for salaries60,900 Bonds payable retired by issuing common stock (no gain or loss on retirement)145,000 Cash paid to retire long-term notes payable105,000 Cash received from sale of equipment51,450 Cash received in exchange for six-month note payable21,000 Land purchased by issuing long-term note payable84,100 Cash paid for store equipment19,950 Cash dividends paid12,600 Cash paid for other expenses33,600 Cash received from customers407,400 Cash paid for merchandise211,848 Use the above information about the cash flows of Ferron Company to prepare a complete statement of cash flows (direct method) for the year ended December 31, 2013. 12-76

77. Exercise 12-15 page 550 Algorithm Cash flows from operating activities Cash received from customers$407,400 Cash received as interest2,100 Cash paid for merchandise(211,848) Cash paid for salaries(60,900) Cash paid for other expenses(33,600) Net cash provided by operating activities$103,152 Cash flows from investing activities Cash received from sale of equipment$51,450 Cash paid for store equipment(19,950) Net cash provided by investing activities31,500 Cash flows from financing activities Cash paid to retire long-term notes payable($105,000) Cash received in exchange for six-month note payable21,000 Cash dividends paid(12,600) Net cash used by financing activities(96,600) Net increase in cash$38,052 Cash and cash equivalents balance, December 31, 201221,000 Cash and cash equivalents balance, December 31, 2013$59,052 Noncash investing and financing activities: $145,000 $84,100 FERRON COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 Bonds payable retired by issuing common stock Land purchased by issuing long-term note payable Cash and cash equivalents balance, December 31, 2012$21,000 Cash and cash equivalents balance, December 31, 2013$59,052 Cash received as interest$2,100 Cash paid for salaries$60,900 Bonds payable retired by issuing common stock (no gain or loss on retirement)$145,000 Cash paid to retire long-term notes payable$105,000 Cash received from sale of equipment$51,450 Cash received in exchange for six-month note payable$21,000 Land purchased by issuing long-term note payable$84,100 Cash paid for store equipment$19,950 Cash dividends paid$12,600 Cash paid for other expenses$33,600 Cash received from customers$407,400 Cash paid for merchandise$211,848 12-77

78. Exercise 12-16 page 551 12-78

79. Exercise 12-16 page 551 Balance, Dec. 31, 2012333,000 Receipts from customers5,000,000 Payments for merchandise2,590,000 Receipts from dividends208,400 Payments for wages550,000 Receipts from land sale220,000 Payments for rent320,000 Receipts from machinery sale710,000 Payments for interest218,000 Receipts from issuing stock1,540,000 Payments for taxes450,000 Receipts from borrowing3,600,000 Payments for machinery2,236,000 Payments for long-term investments1,260,000 Payments for note payable386,000 Payments for dividends500,000 Payments for treasury stock218,000 Balance, Dec. 31, 2013 ? Use this information to prepare a complete statement of cash flows for year 2013. The cash provided or used by operating activities should be reported using the direct method. The following summarized Cash T-account reflects the total debits and total credits to the Cash account of Thomas Corporation for calendar year 2013. Cash 2,883,400 12-79

80. Exercise 12-16 page 551 Balance, Dec. 31, 2012333,000 Receipts from customers5,000,000 Payments for merchandise2,590,000 Receipts from dividends208,400 Payments for wages550,000 Receipts from land sale220,000 Payments for rent320,000 Receipts from machinery sale710,000 Payments for interest218,000 Receipts from issuing stock1,540,000 Payments for taxes450,000 Receipts from borrowing3,600,000 Payments for machinery2,236,000 Payments for long-term investments1,260,000 Payments for note payable386,000 Payments for dividends500,000 Payments for treasury stock218,000 Balance, Dec. 31, 20132,883,400 Cash Cash flows from operating activities Cash received from customers$5,000,000 Cash received from dividends208,400 Cash paid for merchandise(2,590,000) Cash paid for wages(550,000) Cash paid for rent(320,000) Cash paid for interest(218,000) Cash paid for taxes(450,000) Net cash provided by operating activities$1,080,400 Cash flows from investing activities Cash received from sale of land220,000 Cash received from sale of machinery710,000 Cash paid for purchases of machinery(2,236,000) Cash paid for purchases of LT investments(1,260,000) Net cash used by investing activities(2,566,000) Cash flows from financing activities Cash received from issuing stock1,540,000 Cash received from borrowing3,600,000 Cash paid for note payable(386,000) Cash paid for dividends(500,000) Cash paid for treasury stock purchases(218,000) Net cash provided by financing activities4,036,000 Net increase in cash$2,550,400 Beginning balance of cash333,000 Ending balance of cash$2,883,400 THOMAS COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 12-80

81. Exercise 12-16 page 551 Algorithm Balance, Dec. 31, 2012174,500 Receipts from customers6,980,000 Payments for merchandise2,094,000 Receipts from dividends209,000 Payments for wages1,152,000 Receipts from land sale314,000 Payments for rent419,000 Receipts from machinery sale942,000 Payments for interest105,000 Receipts from issuing stock2,094,000 Payments for taxes963,000 Receipts from borrowing2,513,000 Payments for machinery2,830,000 Payments for long-term investments1,130,000 Payments for note payable2,010,000 Payments for dividends1,060,000 Payments for treasury stock840,000 Balance, Dec. 31, 2013623,500 Use this information to prepare a complete statement of cash flows for year 2013. The cash provided or used by operating activities should be reported using the direct method. The following summarized Cash T-account reflects the total debits and total credits to the Cash account of Thomas Corporation for calendar year 2013. Cash 12-81

82. Exercise 12-16 page 551 Algorithm Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Beginning balance of cash174,500 Ending balance of cash$623,500 THOMAS COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 12-82

83. Exercise 12-16 page 551 Algorithm Cash flows from operating activities Cash received from customers$6,980,000 Cash received from dividends209,000 Cash paid for merchandise(2,094,000) Cash paid for wages(1,152,000) Cash paid for rent(419,000) Cash paid for interest(105,000) Cash paid for taxes(963,000) Cash flows from investing activities Cash received from sale of land314,000 Cash received from sale of machinery942,000 Cash paid for purchases of machinery(2,830,000) Cash paid for purchases of long-term investments(1,130,000) Cash flows from financing activities Cash received from issuing stock2,094,000 Cash received from borrowing2,513,000 Cash paid for note payable(2,010,000) Cash paid for dividends(1,060,000) Cash paid for treasury stock purchases(840,000) THOMAS COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 12-83

84. Exercise 12-16 page 551 Algorithm Cash flows from operating activities Cash received from customers$6,980,000 Cash received from dividends209,000 Cash paid for merchandise(2,094,000) Cash paid for wages(1,152,000) Cash paid for rent(419,000) Cash paid for interest(105,000) Cash paid for taxes(963,000) Net cash provided by operating activities$2,456,000 Cash flows from investing activities Cash received from sale of land314,000 Cash received from sale of machinery942,000 Cash paid for purchases of machinery(2,830,000) Cash paid for purchases of long-term investments(1,130,000) Net cash used by investing activities(2,704,000) Cash flows from financing activities Cash received from issuing stock2,094,000 Cash received from borrowing2,513,000 Cash paid for note payable(2,010,000) Cash paid for dividends(1,060,000) Cash paid for treasury stock purchases(840,000) Net cash provided by financing activities697,000 Net increase in cash 449,000 Beginning balance of cash174,500 Ending balance of cash$623,500 THOMAS COMPANY Statement of Cash Flows - Direct Method For the year ended December 31, 2013 12-84

85. Exercise 12-17 page 551 12-85

86. Exercise 12-17 page 551 20122013 Average total assets$1,240,000$1,510,000 Net operating cash flow$102,920$138,920 2012 2013 8.3% 9.2% Net operating cash flow Average total assets Cash Flow on Total Assets $102,920 / $1,240,000 = $138,920 / $1,510,000 = A company reported average total assets of $1,240,000 in 2012 and $1,510,000 in 2013. Calculate its cash flow on total assets ratio for both years. 12-86

87. Exercise 12-17 page 551 Algorithm 20122013 Average total assets$260,000$286,000 Net operating cash flow$18,460$22,308 2012 20137.8% Net operating cash flow Average total assets Cash Flow on Total Assets $18,460 / $260,000 = $22,308 / $286,000 = A company reported average total assets of $260,000 in 2012 and $286,000 in 2013. Calculate its cash flow on total assets ratio for both years. 7.1% 12-87

88. Exercise 12-18 page 551 12-88

89. Exercise 12-18 page 551 € 784Cash paid for purchase of treasury stock and other€ 199 1,183Cash paid for other financing activities2,282 3,037Cash from disposal of plant assets and intangibles189 883Cash paid for plant assets and intangibles3,921 290Cash and cash equivalents, December 31, 201010,442 Prepare its statement of cash flows for 2011 using the indirect method. Cash flows from operating activities Net income€ 784 Adjustments to reconcile net income to operating cash flow: Net decrease in working capital€ 1,183 Depreciation and amortization3,037 Gains on disposals and other(883) Net cash provided by operating activities4,121 Cash flows from investing activities Cash from disposal of plant assets and intangibles189 Cash paid for plant assets and intangibles(3,921) Net cash used by investing activities(3,732) Cash flows from financing activities Cash paid for dividends(290) Cash paid for purchase of treasury stock and other(199) Cash paid for other financing activities(2,282) Net cash used by financing activities(2,771) Net decrease in cash(2,382) Cash and cash equivalents, December 31, 201010,442 Cash and cash equivalents, December 31, 2011€ 8,060 Peugeot, S.A. Company Statement of Cash Flows - Indirect Method For the year ended December 31, 2011 Net income Net decrease in working capital Depreciation and amortization Gains on disposals and other Cash paid for dividends Peugeot, S.A. reports the following financial information for the year ended December 31, 2011 (euros in millions). 12-89

90. Exercise 12-18 page 551 Algorithm Prepare its statement of cash flows for 2011 using the indirect method. Peugeot, S.A. reports the following financial information for the year ended December 31, 2011 (euros in millions). € 984€ 399 1,3834,282 5,037389 1,0835,921 49013,042 Net income Net decrease in working capital Depreciation and amortization Gains on disposals and other Cash paid for dividends Cash paid for purchase of treasury stock and other Cash paid for other financing activities Cash from disposal of plant assets and intangibles Cash paid for plant assets and intangibles Cash and cash equivalents, December 31, 2010 12-90

91. Exercise 12-18 page 551 Algorithm Cash flows from operating activities Net income€ 984 Adjustments to reconcile net income to operating cash flow: Net decrease in working capital€ 1,383 Depreciation and amortization5,037 Gains on disposals and other(1,083) Net cash provided by operating activities6,321 Cash flows from investing activities Cash from disposal of plant assets and intangibles389 Cash paid for plant assets and intangibles(5,921) Net cash used by investing activities(5,532) Cash flows from financing activities Cash paid for dividends(490) Cash paid for purchase of treasury stock and other(399) Cash paid for other financing activities(4,282) Net cash used by financing activities(5,171) Net decrease in cash(4,382) Cash and cash equivalents, December 31, 201013,042 Cash and cash equivalents, December 31, 2011€ 8,660 Peugeot, S.A. Company Statement of Cash Flows - Indirect Method For the year ended December 31, 2011 € 984€ 399 1,3834,282 5,037389 1,0835,921 49013,042 Net income Net decrease in working capital Depreciation and amortization Gains on disposals and other Cash paid for dividends Cash paid for purchase of treasury stock and other Cash paid for other financing activities Cash from disposal of plant assets and intangibles Cash paid for plant assets and intangibles Cash and cash equivalents, December 31, 2010 12-91

92. 12-92

93. 12-93

94. 12-94

95. 12-95